# ARCHIPELAGO SECURITIES L.L.C. X-17A-5 (2021-03-01) — Broker-dealer annual report - Company: ARCHIPELAGO SECURITIES L.L.C. - Form: X-17A-5 - Filed: 2021-03-01 - Period: 2020-12-31 - Accession: 0001098157-21-000001 - CIK: 1098157 - File #: 8-52140 - Material weakness: No - Auditor: Frazer Deeter - Auditor location: Atlanta, GA - Contact: Sean Thomasson - Phone: 7709162593 - Signed by: Sean Thomasson (FINOP) Original filing: https://www.sec.gov/Archives/edgar/data/1098157/000109815721000001/ArcaSecPublic2020B.pdf --- {0}------------------------------------------------ # **Archipelago Securities, LLC** Statement of Financial Condition Filed Pursuant to Rule 17a-5 of the Securities Exchange Act of 1934 December 31, 2020 {1}------------------------------------------------ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 # **ANNUAL AUDITED REPORT FORM X-17A-5 PART III** OMB APPROVAL OMB Number 3235-0123 Expires: October 31, 2023 Estimated average burden hours per response. 12.00 | SEC FILE NUMBER | |-----------------| | a-52140 | FACING PAGE Information Required of Brokers and Dealers Pursuant to Section 17 of the Securities Exchange Act of 1934 and Rule 17a-5 Thereunder | REPORT FOR THE PERIOD BEGINNING 01/01/2020
MM/DD/YY
A. REGISTRANT IDENTIFICATION | AND ENDING 12/31/2020 | MMUDD/TY | |----------------------------------------------------------------------------------------|------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | | | | | | | | | NAME OF BROKER-DEALER: Archipelago Securities, LLC | | OFFICIAL USE ONLY | | ADDRESS OF PRINCIPAL PLACE OF BUSINESS: (Do not use P.O. Box No.) | | FIRM I.D. NO. | | | | | | (No. and Street) | | | | IL | | 60654-4721 | | (State) | | (zip Code) | | | | (770) 916-2593 | | | | (Area Code — Telephone Number) | | | | | | | | | | | | | | | Me name) | | | | GA | 30309 | | (City) | (State) | (Zip Code) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 1230 Peachtree St NE, Suite 1500 Atlanta | NAME AND TELEPHONE NUMBER OF PERSON TO CONTACT IN REGARD TO THIS REPORT
B. ACCOUNTANT IDENTIFICATION
INDEPENDENT PUBLIC ACCOUNTANT whose opinion is contained in this Report*
(Name — ifindividual. state last, au
United States or any of its possessions.
FOR OFFICIAL USE ONLY | \*Claims fin-exemption from the requirement that the annual report be covered by the opinion of an independent public accoun ant must be supported by a statement nifacts and circumstances relied on as the basis for the exemption. See Section 240.17a-5(e)(2) > Potential persons who are to respond to the collection of information contained in this form are not required to respond unless theform displays a currently valid OMB control number. SEC 1410 (11-05) {2}------------------------------------------------ #### OATH OR AFFIRMATION | I Robert Hill | , swear (or affirm) that, to the best of | | | | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--| | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
Archipelago Securities, LLC
, as | | | | | | of December 31 | , are true and correct. I further swear (or affirm) that
20 20 | | | | | classified solely as that of a customer, except as follows: | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | | | | | leobeft 161 | | | | | | Signature | | | | | | Executive Principal | | | | | | Title | | | | | This report ** contains (check all applicable boxes):
El (a) Facing Page.
9 (b) Statement of Financial Condition.
of Comprehensive Income (as defined in §210.1-02 of Regulation S-X).
(d) Statement of Changes in Financial Condition.
(e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital.
(f) Statement of Changes in Liabilities Subordinated to Claims of Creditors.
(g) Computation of Net Capital.
WM.
(h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3.
•••••
(i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3.
❑
consolidation.
✓ (I) An Oath or Affirmation.
(m) A copy of the SIPC Supplemental Report. | E (c) Statement of Income (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement
(j) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule 15c3-I and the
Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3.
(k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of
El (n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. | | | | | **For conditions of confidential treatment of certain portions °phis filing, see section 240.17a-5(e)(3). | | | | | {3}------------------------------------------------ #### OATH OR AFFIRMATION | 1 Sean Thomasson | , swear (or affirm) that, to the best of | |-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------| | Archipelago Securities, LLC | my knowledge and belief the accompanying financial statement and supporting schedules pertaining to the firm of
as | | of December 31 | , 2020
, are true and correct. I further swear (or affirm) that | | classified solely as that of a customer, except as follows: | neither the company nor any partner, proprietor, principal officer or director has any proprietary interest in any account | | | | | | | | | Signature | | | Finance and Operations Principal | | | Title | | Notary Public | | | This report " contains (check all applicable boxes):
Q✓
(a) Facing Page.
(b) Statement of Financial Condition.
of Comprehensive Income (as defined in §210.1-02 of Regulation S-X).
(d) Statement of Changes in Financial Condition.
(e) Statement of Changes in Stockholders' Equity or Partners' or Sole Proprietors' Capital.
(f) Statement of Changes in Liabilities Subordinated to Claims of Creditors.
(g) Computation of Net Capital.
(h) Computation for Determination of Reserve Requirements Pursuant to Rule 15c3-3.
(i) Information Relating to the Possession or Control Requirements Under Rule 15c3-3.
Computation for Determination of the Reserve Requirements Under Exhibit A of Rule 15c3-3.
consolidation.
✓
(I) An Oath or Affirmation.
(m) A copy of the SIPC Supplemental Report.
0 | E (c) Statement of Income (Loss) or, if there is other comprehensive income in the period(s) presented, a Statement
(j) A Reconciliation, including appropriate explanation of the Computation of Net Capital Under Rule I 5c3-I and the
(k) A Reconciliation between the audited and unaudited Statements of Financial Condition with respect to methods of
(n) A report describing any material inadequacies found to exist or found to have existed since the date of the previous audit. | | | **For conditions of confidential treatment of certain portions of this filing, see section 240.17a-5(e)(3). | {4}------------------------------------------------ # Archipelago Securities, LLC Index December 31, 2020 ## Page(s) | 1
Report of Independent Registered Public Accounting Firm | | |--------------------------------------------------------------|--| | Statement of Financial Condition
2 | | | Notes to the Statement of Financial Condition
3-6 | | {5}------------------------------------------------ ![](_page_5_Picture_0.jpeg) ## **REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** To the Member of Archipelago Securities, LLC ### **Opinion on the Statement of Financial Condition** We have audited the accompanying statement of financial condition of Archipelago Securities, LLC (the "Company") as of December 31, 2020, and the related notes (collectively referred to as the "financial statement"). In our opinion, the financial statement presents fairly, in all material respects, the financial position of the Company as of December 31, 2020, in conformity with accounting principles generally accepted in the United States of America. #### **Basis for Opinion** The financial statement is the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statement based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statement, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statement. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statement. We believe that our audit provides a reasonable basis for our opinion. We have served as the Company's auditor since 2015 Atlanta, Georgia February 26, 2021 {6}------------------------------------------------ | Cash and cash equivalents
7,198
\$
Receivables from brokers or dealers and clearing
organizations
50,623
Receivables from related parties
1,843
Other assets
292
Total assets
\$ 59,956
Liabilities and Member's Equity
Liabilities
Payables to brokers or dealers and clearing organizations
33,621
\$
Accounts payable and accrued liabilities
3,980
Payables to related parties
396
Other liabilities
701
Total liabilities
38,698
Member's equity
21,258
Total liabilities and member's equity
\$
59,956 | Assets | | |-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | The accompanying notes are an integral part of this financial statement. {7}------------------------------------------------ #### 1. Organization and Nature of Operations Archipelago Securities, LLC (the "Company"), a Delaware limited liability company, is a wholly-owned subsidiary of NYSE Group, Inc. (the "Parent"). The Parent is a wholly-owned subsidiary of NYSE Holdings LLC, formerly named NYSE Euronext Holdings, LLC. The Company is a registered brokerdealer under the Securities Exchange Act of 1934 (the "Exchange Act") and is a member of the Financial Industry Regulatory Authority ("FINRA"). The Parent owns and operates NYSE Market Inc. ("NYSE"), NYSE Arca LLC ("Arca"), NYSE American LLC ("NYSE American"), NYSE National, Inc. ("NYSE National"), and NYSE Chicago Holdings, Inc. ("NYSE Chicago") for trading of equities and NYSE Arca, Inc. ("Arca Options") and NYSE AMEX Options LLC ("AMEX Options") for trading of options. The Company primarily acts as a routing agent of NYSE, Arca, NYSE American, NYSE National, NYSE Chicago, Arca Options, and AMEX Options by routing orders to other execution venues that contain the best bid or offer in the equities and options markets. The Company also clears transactions on behalf of NYSE, Arca, and Archipelago Trading Services, Inc. ("ATS"), which is a wholly-owned subsidiary of the Parent. #### 2. Summary of Significant Accounting Policies #### Basis of Presentation The accompanying financial statement is prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The preparation of the financial statement in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. #### Cash and Cash Equivalents The Company considers all highly liquid investments with original maturities of three months or less to be cash equivalents. Investments in money market funds are considered to be cash equivalents. The carrying value of such cash equivalents approximates their fair value due to the short-term nature of these instruments. Cash equivalents at December 31, 2020, include \$0 invested in money market funds that are governed under Rule 2a-7 of the Investment Company Act of 1940. #### Receivables from/Payables to Brokers or Dealers, Clearing Organizations, and Customers Amounts receivable from clearing organizations may be restricted to the extent that they serve as clearing fund deposits. At December 31, 2020, receivables from and payables to clearing organizations primarily represented amounts due for securities failed to deliver or failed to receive and deposits with clearing organizations. In the normal course of business, a portion of the Company's securities transactions, money balances, and security positions are transacted with several third-party clearing firms. The Company {8}------------------------------------------------ #### 2. Summary of Significant Accounting Policies(continued) is subject to credit risk to the extent any clearing firm with whom it conducts business is unable to fulfill contractual obligations on its behalf. #### Income Taxes The Company is a single member limited liability company and has elected, for federal, state and local income tax purposes, to be treated as a division of the Parent. Such entities are generally not subject to entity-level federal, state or local income taxation. All items of income, expense, gain and loss of the Company are therefore included in the consolidated tax returns of income of the Parent. Federal and unitary state income tax receivables or payables with the Parent on behalf of the Company are included as a component of receivables or payables with related parties. Income taxes reflected in the accompanying financial statement are calculated as if the Company filed separate income tax returns and are accounted for under the liability method. The Company recognizes income taxes under the liability method. The Company recognizes a current tax liability or tax asset for the estimated taxes payable or refundable on tax returns for the current year. The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the financial statement carrying amounts and the tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using current enacted tax rates in effect. #### 3. Receivables from/Payables to Brokers or Dealers, Clearing Organizations, and Customers Securities failed to deliver or receive ("fails") represent receivable or payable balances, respectively, arising from transactions with customers and brokers/dealers that have not settled on settlement date. Fails open at December 31, 2020, which remain unsettled, do have a material effect on the Company's financial statements. As of December 31, 2020, two firms accounted for 56% of securities failed to deliver and three firms accounted for 90% of securities failed to receive. Receivables from and Payables to brokers, dealers and clearing organizations at December 31, 2020 consist of the following: | Assets | | |--------------------------------------------------------|-----------| | Securities failed to deliver | \$ 34,382 | | Deposits with clearing organizations | 16,241 | | Total receivables from brokers or dealers and clearing | | | organizations | \$ 50,623 | | Liabilities: | | | Securities failed to receive | \$ 33,621 | | Total payables to brokers or dealers and clearing | | | organizations | \$ 33,621 | {9}------------------------------------------------ #### 4. Related Party Transactions The Company primarily acts as a routing agent of affiliates by routing orders to other execution venues that contain the best bid or offer in the market. The Company earns routing fees from its affiliates representing a markup of actual routing costs charged by other execution venues. The Company also performs clearing services on behalf of affiliates. Throughout the year the Company incurs costs from its affiliates when it routes trades from one affiliated exchange to another affiliated exchange. The Parent employs corporate, marketing, and information technologies staff to support the Company. Under a contract, required by the FINRA, with the Company, the Parent provides operational and support services. The contract is the Parent Subsidiary Expense Agreement, whereby the Parent shall provide all material hardware, software and personnel necessary to facilitate the operation of the routing broker and to provide certain other corporate and business services. The agreement provides for the Company's expenses and liquidity needs to be met by the Parent without expectation of repayment. Customary and reasonable direct expenses are attributable to the ownership and control of all such employed hardware, software and personnel and the Company is dependent on the Parent providing the services in order for the Company to carry out its operations. Amounts payable to the Parent for federal and state income taxes were \$15 at December 31, 2020. As part of operations, certain disbursements are paid through related parties. As a result of the noted transactions, receivables from related parties were \$1,843 and payables to related parties, net of taxes, were \$381 as of December 31, 2020. On March 26, 2018, the Company entered into an unsecured Revolving Note and Cash Subordination Agreement (the "Agreement") with its Ultimate Parent, Intercontinental Exchange, Inc. ( the "Lender"). The Lender has committed \$100 million of credit to the Company that can be accessed at any time and repaid at any time, subsequent to FINRA's approval, without premium or penalty. Credit under the Agreement may be advanced through August 18, 2022, with all unpaid principal and interest due on August 18, 2023. Interest is payable at current rates at the advance date The Lender may accelerate payment date with six months' notice. The Company pays an annual commitment fee for unutilized amounts payable in arrears. There was no outstanding loan balance at December 31, 2020. The Company drew down \$20,000 on January 5, 2021 and is continuing to monitor its liquidity needs to determine if any additional drawdowns will be necessary. #### 5. Concentration The Company's cash is held at an individual U.S. financial institution, which potentially exposes the Company to counterparty risk. The Company has not experienced any losses in these accounts. #### 6. Income Taxes For federal, state and local income tax purposes, the Company's income is included in the Parent's consolidated income tax return. The Company determines its tax expense principally on a separate company basis. {10}------------------------------------------------ #### 6. Income Taxes(continued) The Company's 2010-2020 tax years remain subject to examination by the relevant tax authorities. #### 7. Regulatory Requirements The Company is subject to the Securities and Exchange Commission Uniform Net Capital Rule (Rule 15c3-1), which requires the maintenance of minimum net capital. The Company computes its net capital under the alternative method permitted by the Rule 15c3-1. This method requires that minimum net capital not be less than the greater of \$250 or 2% of aggregate debit items arising from customer transactions pursuant to SEC Rule 15c3-3. As of December 31, 2020, the Company's net capital of \$19,123 was \$18,873 in excess of required net capital. Advances to affiliates, distribution payments and other equity withdrawals are subject to certain notification and other provisions of SEC Rule 15c3-1 and other regulatory bodies. #### 8. Subsequent Events The Company has evaluated subsequent events through February 26, 2021, which is the date this financial statement was issued, and determined that no events or transactions met the definition of a subsequent event for purpose of recognition or disclosure in the accompanying financial statement. Source: SEC EDGAR via Adviser Search (https://search.stillhousedata.com). Agents: see https://search.stillhousedata.com/llms.txt.